Off The Wire
Fed's two interest rate cuts should sustain U.S. growth: Daly
LOS ANGELES (Reuters) - The Federal Reserve’s two interest rate cuts this year should keep the U.S. economic expansion intact, despite the drag from trade uncertainty and slowing global growth, San Francisco Fed President Mary Daly said on Tuesday.
The news about the U.S. economy is “largely positive,” Daly said in remarks prepared for delivery to the Los Angeles World Affairs Council & Town Hall. Unemployment, at 3.5%, is low, job growth is strong, consumer spending is healthy and households are confident, she said.
But with a U.S.-China trade deal far from finished and world growth weakening, headwinds to U.S. growth “have started to gust,” she said. Factory activity is down and business spending has softened.
“To ensure we sustain the expansion against these headwinds,” Daly said, the Fed cut rates in July and September. “This accommodation should help the economy continue to grow so that we can make further progress on our mandated goals of full employment and price stability.”
Daly, who does not vote on monetary policy this year but does participate in the Fed’s regular rate-setting deliberations, gave no signal that she sees a need for another rate cut.
The Fed’s decision last month to cut its policy target rate by a quarter of a percentage point, to a range of between 1.75% and 2.0%, drew three dissents out of 10 total votes.
Traders of interest rate futures expect the Fed to again lower borrowing costs at its Oct. 29-30 policy meeting.
Daly devoted most of her prepared remarks to explain how policymakers other than the Fed, as well as individuals, could help boost workforce participation by improving education and pursuing other structural economic fixes.
Reporting by Ann Saphir; Editing by Paul Simao